The TGS well economics dataset in the Delaware Basin calculates a breakeven price of $59/bbl.
TGS has introduced a game-changing addition to its Well Data Analytics platform - well economics data for the Delaware Basin! This comprehensive dataset empowers clients to conduct benchmarking, capital allocation, and investment analysis with unprecedented speed and accuracy.
The first quarter results from the Dallas Fed Energy Survey were used to compare TGS economic outputs in the basin. The special question of the survey: What WTI oil price does your firm need to profitably drill a new well in the top two areas in which your firm is active? The average response for the Delaware Basin was $64/bbl (Image 1). TGS’s average breakeven price for the Delaware Basin is $59/bbl. In addition to the breakeven price, the recently launched well economics dataset shows that the average payback period for a well in Delaware is ~2.8 years, with an average Net Present Value of ~$5.6mm and an average IRR of ~21%1.
Image 1. Breakeven plot in various basins within L-48 populated by the Federal Reserve Bank of Dallas, using first quarter survey results data.
One of the main takeaways from the survey and the survey comments is that, despite facing headwinds, the oil and gas sector demonstrates resilience and adaptability in the face of adversity. The survey reveals a temporary slowdown in growth during the first quarter of 2023, a break from the more than two-year stretch of rising activity. While the business activity index dropped, industry players remain steadfast in navigating the evolving landscape.
Executives from exploration and production firms have noted a moderated pace in oil and natural gas production, along with rising costs. However, amidst these challenges there are promising signs of improvement. For example, delivery times show positive trends and employment indexes, though with slight decreases, remain positive. These indicators inspire optimism for a brighter future in the industry.
Moreover, optimism remains high among respondents, with expectations for oil and gas prices by year-end 2023 to remain favorable, hovering from $75/bbl to $90/bbl (Image 2). Despite concerns regarding regulatory uncertainties and labor shortages, industry insiders express determination to overcome obstacles and drive the sector forward, fostering a sense of hope and resilience.
Image 2. The Federal Reserve Bank of Dallas populated this WTI crude oil price expectation plot at the end of 2023 using first quarter survey results data.
TGS Well Data Analytics can quickly and accurately help you perform this type of comparison. For more information on TGS Onshore Products or to schedule a demo of Well Data Analytics, contact us at WDPSales@tgs.com.
1 Economic Outputs calculated with pre-generated TGS economic assumptions in the basin, with an average price of $66.0/bbl for oil, $4.3/mcf for gas, and $16/bbl for NGL volumes.
